Hong Kong stock market’s rise in the Year of the Dragon halts due to China’s policy interest rate decision and decline in Hang Seng Index

The Hang Seng Index fell 1.1% to 16,155.61 at the close of trading on Monday, ending a three-day gain of 3.8% last week at the start of the Year of the Dragon. After the week-long Lunar New Year holiday, the tech index fell 2.7%, while the Shanghai Composite Index rose 1.6%.

Tencent fell 2.4% to HK$284.80, Alibaba Group fell 2.1% to HK$71.50 and e-commerce peer Jingtocom fell 4.1% to HK$91.85. Sportswear maker Li Ning fell 8.6% to HK$19.42, while development company Longfor fell 5.1% to HK$8.90.

The People’s Bank of China on Sunday kept its medium-term lending rate unchanged at 2.5% for the sixth consecutive month, in a decision seen as protecting the currency’s downward pressure. In offshore trading, the yuan was at 7.210 yuan to the dollar, down from 7.187 yuan three weeks ago.

“Authorities believe that deteriorating sentiment, rather than weak economic fundamentals, is behind the decline in stock prices,” analysts at BCA Research said in a note. “They will therefore rely on regulatory measures rather than providing significant stimulus to the economy. The weak economic backdrop suggests that any gains in Chinese stocks from any intervention are likely to be short-lived. There is.”

Hang Seng Index compiler leaves bluechip benchmark unchanged in latest review

Meanwhile, stocks listed on mainland stock exchanges soared as local financial markets resumed trading, catching up with solid gains in global markets last week.

The CSI 300 index, which tracks the largest stocks listed in Shanghai and Shenzhen, rose 1.2% on Monday. Hong Kong’s index rose 3.8% last week, Japan’s Nikkei 225 rose 4.3% and New York’s S&P 500 index hit a record high.

Also, Kuaishou, Swire Properties, Xpeng and JD Logistics fell 0.9% to 3.9%. Shares rose last week on speculation that the company could be included in the benchmark Hang Seng Index after a quarterly review. Index creators decided on Friday to keep membership at 82.

Other major Asian markets generally rose. Japan’s Nikkei Stock Average was little changed, while South Korea’s Kospi rose 1.2% and Australia’s S&P ASX 200 rose 0.1%.